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9 examples of artificial intelligence in finance

Discover how artificial intelligence is transforming the financial sector with nine examples of AI in finance.

Artificial Intelligence (AI) is transforming the financial sector, revolutionizing how banks, financial institutions and investors operate. Here are nine examples of AI in finance, and how they are changing the industry:

Fraud detection

AI algorithms can analyze transactions in real time, detect anomalies and patterns that may indicate fraudulent activities, and alert banks to take appropriate actions. An example of fraud detection using AI is PayPal’s fraud detection system. PayPal uses machine learning algorithms and rule-based systems to monitor real-time transactions, and identify potentially fraudulent activities.

The system examines data points like the user’s location, transaction history, and device information to identify abnormalities and patterns that can hint at fraudulent behavior. The technology can notify PayPal’s fraud investigation team about a possibly fraudulent transaction so that they can look into it further or block the transaction. The amount of fraudulent transactions on the network has dramatically decreased thanks to this AI-powered solution, making using PayPal safer and more secure.

Customer service

AI-powered chatbots can provide personalized financial advice, answer customer queries, and automate routine tasks like opening new accounts or updating customer information.

The chatbot “KAI” from Mastercard, which helps clients with account queries, transaction histories and expenditure tracking, is an example of how AI is being used in customer support. KAI uses machine learning algorithms and natural language processing to offer consumers tailored help and financial insights across a variety of channels, including SMS, WhatsApp, and Messenger.

Algorithmic trading

AI can accurately assess past and present market trends, spot patterns, and predict future prices. AI algorithms can also perform transactions in real time, using pre-programmed rules and conditions, optimizing investing strategies and maximizing returns.

Financial institutions and investors benefit significantly from this technology, which enables them to make data-driven decisions and maintain an advantage in the fiercely competitive world of trading.

Related: What are artificial intelligence (AI) crypto coins, and how do they work?

Risk management

By analyzing complex financial data, artificial intelligence can identify potential risks and forecast future scenarios, providing valuable insights that enable banks and other financial institutions to make well-informed decisions. 

An example of risk management using AI is BlackRock’s Aladdin platform. To analyze enormous volumes of financial data, spot risks and opportunities, and give investment managers real-time insights, the Aladdin platform combines AI and machine learning algorithms.

By examining elements like market volatility, credit risk, and liquidity risk, the platform assists investment managers in monitoring and managing risks. Investment managers may enhance their investment strategies and make data-driven decisions thanks to Aladdin’s risk management capabilities, which lower the risk of losses and boost returns.

Portfolio management

AI can analyze vast amounts of financial data and provide insights into investment trends, risks and opportunities, helping investors make informed decisions. An example of portfolio management using AI is Wealthfront, a robo-advisor that uses AI algorithms to manage investment portfolios for clients. 

To create customized investment portfolios for clients based on their goals, risk tolerance, and financial position, Wealthfront combines classic portfolio theory and AI. As market conditions and the client’s goals change, the platform automatically rebalances the portfolio while continuously monitoring its performance. Many investors find Wealthfront an appealing alternative because of its AI-powered portfolio management, which enables customized and optimal investing plans.

Credit scoring

AI algorithms can analyze credit histories, financial statements, and other data to provide accurate credit scores, enabling lenders to make better lending decisions. For instance, ZestFinance’s Zest Automated Machine Learning (ZAML) platform uses AI to analyze credit risk factors and provide more accurate credit scores, improving lending decisions and reducing the risk of default.

Personalized financial advice

AI-powered robo-advisors can provide personalized financial advice and investment strategies based on a client’s financial situation, goals and risk tolerance. For instance, Bank of America’s AI chatbot, Erica, can provide personalized financial advice, answer customer queries and automate routine tasks.

Insurance underwriting 

AI can analyze a range of data points, including demographic information, health records and driving history, to provide accurate insurance underwriting. For instance, to improve accuracy and lower fraud in the insurance market, Lemonade, an AI-powered insurtech company, employs AI algorithms to evaluate claims and underwrite insurance policies.

Related: A brief history of artificial intelligence

Regulatory compliance

AI can help financial institutions comply with complex regulations by analyzing transactions, detecting fraud, and ensuring compliance with Know Your Customer and Anti-Money Laundering regulations. 

For instance, ComplyAdvantage helps businesses comply with legal obligations and avoid fines by using AI and machine learning algorithms to monitor financial transactions and identify potential money laundering activities.

7 artificial intelligence examples in everyday life

AI impacts everyday life: personal assistants, social media, healthcare, autonomous vehicles, smart homes and more!

Artificial intelligence (AI) is becoming increasingly important in our daily lives. AI can automate routine and time-consuming tasks, allowing us to focus on more important activities. In addition, AI algorithms can analyze vast amounts of data to personalize products, services and experiences. Moreover, AI is driving innovation in various industries, such as finance, retail and education.

Here are seven artificial intelligence examples in everyday life.

Personal Assistants

AI-powered personal assistants, such as Siri, Google Assistant and Amazon Alexa, are integrated into smartphones, smart speakers and other devices and can perform a wide range of tasks, from setting reminders and sending messages to playing music and controlling smart home devices.

Social media

Social media sites utilize AI to examine user preferences and behavior, suggest pertinent material, and customize the user experience. Moreover, bogus news, hate speech and other harmful content are found and eliminated thanks to AI systems.

For instance, Meta uses AI to detect and remove fake news and other harmful content. Instagram uses AI to recommend posts and stories based on user behavior. TikTok uses AI to personalize the user experience and recommend videos.

Customer service

Businesses are increasingly using virtual assistants and chatbots powered by AI to offer 24/7 customer service. Natural language processing is used by these chatbots to comprehend consumer questions and deliver relevant responses.

For instance, many companies, such as H&M, use AI-powered chatbots to provide customer support. These chatbots can handle a wide range of queries, such as tracking orders and processing returns.

Related: 10 emerging technologies in computer science that will shape the future

Healthcare

Applications of artificial intelligence in healthcare include patient monitoring, medication research and medical imaging. Medical picture analysis, anomaly detection and diagnosis support are all capabilities of AI algorithms.

For instance, Merative (formally IBM Watson Health) uses AI to analyze medical images and assist doctors in making diagnoses. The app Ada uses AI to help users identify symptoms and connect with healthcare professionals.

Related: 9 promising blockchain use cases in healthcare industry

E-commerce

Customers are given product recommendations by e-commerce sites, such as Amazon, using AI algorithms based on their search queries, browsing histories and other information. Sales are boosted as a result, and customer satisfaction is enhanced.

Autonomous vehicles

AI is used in self-driving cars, trucks and buses to perceive their environment, map out routes and make judgments while driving. It is anticipated that this technology will lessen collisions, gridlock in the streets and pollutants.

For instance, Tesla uses AI to power its self-driving cars, which can navigate roads, highways and parking lots without human intervention.

Smart home devices

Smart home devices such as thermostats, lighting systems and security systems use AI to learn user preferences and adjust settings accordingly. These devices can also be controlled remotely using smartphones or voice commands.

For instance, Philips Hue uses AI to adjust lighting based on user preferences and ambient light levels.

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